Nestle net up 20%

Gurgaon-headquartered Nestle India has reported a 20 per cent increase in its net profits to Rs 218.5 crore, against Rs 182.76 crore in the corresponding period a year ago.

Net sales were up 25.7 per cent to touch Rs 1,637.30 crore compared with Rs 1,302.23 crore reported for the corresponding period a year ago.

The company’s total expenditure rose 29 per cent to Rs 3,753 crore during the quarter led by raw material costs, which surged 30 per cent to Rs 2,249 crore and other expenditure, which increased 28 per cent to Rs 1,088.39 crore.

Nestle said materials costs continued to remain high due to prices of commodities, while higher advertising and sales promotions had contributed to the increase in other expenditure.

The firm declined to comment on whether it would take price rises in view of commodity inflation. But during the second quarter, the firm had reduced grammage by six per cent on Maggi noodles by bringing down a 90-gram pack to 85 grams, respectively.

Analysts say Nestle is likely to be selective on price rises in view of growing competition, especially in its core category of noodles, where it fights GSK and HUL, besides a host of others.

The quarter saw a few product launches including its high-profile Maggi vegetable multigrainz noodles, which was the company’s response to rival GSK’s Foodles, which also plays on the same platform.

The firm also announced a dividend of Rs 27 per share of nominal value Rs 10.

The stock of Nestle was trading up 1.51 per cent today to close trade at Rs 3,517 per share. It hit an intra-day high of Rs 3,520 per share, which was also its 52-week high.